Received a call from a corporate recruiter from Alameda, California and wanted to know if I am interested in a position in Alameda. My reservations are: housing - a decent house (about 1800 sq. ft) costs about $850K; schools - not as good as those in the Twin Cites, Minnesota. The positive aspects are: mild climate, residence tuition fee to attend the University of California (for my kids), increased pay (I think), and close to parents, brother and sister.

Has anyone moved to the Bay Area or other areas that are much more expensive to live?

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I lived in the Bay Area for 19 years. The problem: traffic. Going somewhere could take 15 minutes or 1 hour depending on traffic.

Parking can be bad, too. I remember going to a restaurant, spending 30 minutes looking for parking and then giving up. Sometimes DW came back home saying "I can't find parking at BART (the subway), can you drive me there?"

I spent 5 years there. Costs were about 15% higher than living in Boston, which aint cheap. As Al says, you just cant get there from here in a car for about 6 hours out of the day. Enjoy standing in very long lines if you go out for dinner on a weekend to a popular restaurant. I waited 3 hours at one seafood place before giving up completely.

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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.

My cousin made the move from Seattle to there about 5 years ago... the salary he was quoted was excellent by Seattle standards, but once he got there, reality set in. Within a few months, he was delivering pizza at night for some extra cash.... one evening he delivered a pizza to his boss' home (of course he asked "why are you delivering pizza?").

Long story short, after a year or so, he returned to Seattle with a pile of debt, and now works for the local software giant. I have other friends I graduated with, and all have similar stories about living in SF... they all have high salaries, but always seem to complain about money. I'll never move down there

Thanks for all the input. I am very familiar with the Bay Area since I went to high school and college there, worked in Silicon Valley for a few years, and have been visting my parents, brother and sister every year since I left there almost 20 years. The traffic is congested, grocery store and shopping malls or plazas are crowded. I agree that finding a parking space (Bart station, down town, China town) is a struggle.

The cost of living calculator gives the following numbers:
Salary in Minneapolis MN: $100,000
Comparable salary in Oakland CA: $145,048.54

I have lived in the Bay Area for over 10 years. I went to school here and work as an engineer.

I do not think the Bay Area is a good place to raise a family for a number of reasons, but the high housing costs lead the list. The extra high costs are due largely to California land use housing policies here, not inherent demand (it would only be expensive without this, not exorbitant). High housing costs are the primary reason that the population is not increasing here anymore, we pretty much have the same population as four years ago. And the population is aging in place because families are leaving in droves. San Jose is closing at least 3 schools a year. San Francisco (which is only about 10% of the population of the Bay Area but is the country's fastest shrinking large city last time I checked) just announced closing or reorganizations of 14 schools and more are going to come. This is happening all over the Bay Area.

The economics comes down to this, IMO -- for a single person spending little compared to their salary (like me) it makes economic sense. I just live in an apartment ($1000/mo) and bank about 50% of my gross salary and spend less than 20% (the rest going to taxes). For a family spending a larger percentage of their salary, it rarely makes sense because the higher costs matter more relative to salary differences.

I have no idea what people are talking about waiting for restaurants, parking, etc., I assume they are mostly talking about San Francisco(?), which is not like the rest of the Bay Area in terms of crowding, parking, tourists, etc. I do not enjoy going to SF at all for these reasons. I live in downtown San Jose, 1000% different and very safe. Traffic is not the greatest, but this does not interfere with day to day life here for many folks unless you live in certain areas (typically to lower housing costs).

You mentioned 19% higher gross pay. Independent of housing costs (which alone make the move not make sense for financial reasons, at least) your income tax costs are going to be higher. 19% higher gross pay is only about (roughly) 15% higher net pay since your marginal tax rates are higher than your overall tax rate. And you can cut an additional 3% off your gross or say 4% of your net pay because of higher income tax rates in California than Minnesota, which also kick in earlier. So you are looking at only 11% more NET pay before even considering these many other issues. And your property taxes will go way up, too.

Naturally, your analysis is not only financial and must consider many other things.

I do not trust those cost of living calculators at all. For instance, groceries are roughly the same price here as the rest of the country. Perhaps, you pay 5% more here than national average. Gas is more expensive by probably 12-15% due to special gas taxes here as well as California's requirement of an exclusive blend and certain container requirements for gas stations, in addition to higher land and labor costs. The latter leads to higher prices in San Francisco than the rest of the Bay Area (typical of a number of items which are more expensive there)

I do not trust those cost of living calculators at all. For instance, groceries are roughly the same price here as the rest of the country. Perhaps, you pay 5% more here than national average. Gas is more expensive by probably 12-15% due to special gas taxes here as well as California's requirement of an exclusive blend and certain container requirements for gas stations, in addition to higher land and labor costs. The latter leads to higher prices in San Francisco than the rest of the Bay Area (typical of a number of items which are more expensive there)

Kramer

Kramer,

Thanks for your insight. I agree that the numbers from the calculator are questionable. I shopped at Safeway in Alameda last December. The prices were about 15% higher. Fruits and vegetable were 50% cheaper. Seafood items were 25% cheaper. Chinese grocery items (in China Town) were 30% cheaper. Big ticket items (e.g., car, appliance) were about the same. The gasoline prices were slightly higher.

The traffic, as you mentioned, is not bad if you live and work in the same city (i.e., Alameda - in this case).

My biggest concerns are housing costs and the school system.

Spanky

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May we live in peace and harmony and be free from all human sufferings.

If you decide to follow up on this and have kids do the following. Go to the schools where they will be attending. Look at the population in the schools. When we lived there the non english speaking population in the schools was huge. Imagine a teacher having to deal with that. We were in a very well rated silicon valley system however my kids were behind when we relocated back at the end of the assignment.

Also, back when we were there, over ten years ago the company that had us there paid our rent of $2,000/month. We made out well, but many of our neighbors were one paycheck away from losing it all. the tax structure is very odd, with people living in multi milllion dollar houses paying a few hundred dollars thanks to prop 13, and newcomers paying much more.

Check with people as well how long it takes to get through college. I have no idea now but back then it took kids longer because there was not enough availability of classes and it was normal to take 6 or 7 years. That is based on what people told us so may not be totally accurate, but worth looking into.

Check with people as well how long it takes to get through college. I have no idea now but back then it took kids longer because there was not enough availability of classes and it was normal to take 6 or 7 years. That is based on what people told us so may not be totally accurate, but worth looking into.

Shorttimer,

I have three nephews that took 5 years to graduate from college (2 at UCSD and one at UCSB) because they wanted to take their time before entering the work force but not availability of classes.

Spanky

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May we live in peace and harmony and be free from all human sufferings.

I sounds like you already know a lot about the advantages and disadvantages of the bay area. I'll give you my perspective.

History: I moved to the bay area after getting my BS. I worked for a couple of years then got a Ph.D. at Berkeley. I then lived on the east coast for a number of years before returning to the bay area and I've now been back here for about 15 years.

Housing: Obviously this is a huge negative. Prices are ridiculous. We were lucky in that we sold and moved to the east coast about the time that prices peaked and moved back after they had dropped about 20% but we still had to make a lot of compromises. We decided to buy a house that minimized commute time. We paid more and got a smaller house but I think that it was the right decision. This somewhat minimizes the congestion effect because we don't have to drive far or get on the freeway. It doesn't make any sense to me to spend your life on the freeway. If you can't get over the housing prices you shouldn't even consider moving here.

Congestion: Definitely a problem. But it is minimized if you live in the right location.

Schools: I have heard good things about the Minnesota school system and my suspicion is that on average Minnesota schools are better but I would not automatically discount bay area schools. (Disclosure: my kids go to a private school.) Bay area schools probably have a greater variation than Minnesota schools and I think that (unfortunately) it is more a function of teh demographics of the students attending the schools than the funding level, etc. It is difficult to draw any conclusions from individual cases but a year or two a ago I heard this story. A student moved from the east coast and was attending one of the better HS's in Santa Clara valley. On the east coast this student was a straight A student with all Honors and AP classes. In CA the student dropped the Honors and AP courses because he was not able to handle the level of competition. If anything in the better school districts I have heard that the real problem is that the competition is just so intense that a lot students can't handle it emotionally. If a student can rise to the level of the competition then these schools can be a great place to be otherwise they could have a lot of problems. Regarding the language issue. Yes, this may also be an issue in certain cases. The other side of the coin is that some of these students that currently can't speak english will be founding the Googles's and Yahoo's 10 years from now after they get out of Stanford with their Ph.Ds. I'll try to avoid ethnic sterotyping but I do find it humorous when I hear 2nd generation immigrants and their parents complaining that 1st generation students study to much and the 1st generation students complaining that the new immigrants study to much.

Another experience: I'm of European descent. My wife is asian. When we came back to the bay area and my kids were small we had them in a parent-tot sports class. One day I looked around and noticed that about 1/3 of the kids looked like me (i.e. caucasian), 1/3 looked like my wife (i.e. asian) and about 1/3 looked like my kids (i.e. half asian and half caucasian). I thought that was a good thing, at least for my family. Now Minnesota is know as a progressive state but I don't think you'll find that sort of thing in many places besides CA. I didn't on the east coast. You know I don't think that I ever heard anyone comment on the ethnic composition of the class. Of course ethnic relations are not perfect but in that class it just seemed kind of natural.

The weather and outdoor activities: This is one of the things that you pay extra for. A few years ago I was trying to get a colleague to run on our corporate track and field team (he did the decathalon in college) but he said that he wanted to get in shape first. One monday I asked him if he had worked out over the weekend. He looked at me kind of sheepishly and said no that he went snowboarding on saturday and surfing on sunday. You can't do that in many other places. I love to, for example, go for a bike ride or a trail run in the Santa Cruz mountains in shorts and t-shirt on New Year's day. (Sometimes I do both!) If you spend your life indoors then this isn't as important but if you like outdoor activities and want to do them all year then CA is a great place. I suppose that if I were in MN I would do a lot of X-C skiing in the winter.

Family: When we were on the east coast we were using all of our vacation time coming back here to visit family.

Now would I move to CA today? I'm glad I don't have to make that decision but I can tell you that I'm very happy that we moved here when we did. It may delay FI a few years but I think that for me the lifestyle trade offs were worth it and isn't that why we are interested in RE in the first place is because of the lifestyle.

I have told my DW that it probably doesn't make sense to stay in the Santa Clara valley after we retire but we would look up and down the west coast for a retirement home.

Right now a company would have to pay me a "weather/lifestyle" bonus to get me to leave.

Spanky - Is this salary range in line with what you were offered? I know it seems like a lot of money compared to MN, however, it's so darn expensive out here. The housing costs are insane. I can't imagine how difficult it must be trying to enter or re-enter the Bay Area right now.

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